Dr. Hamad Kasasbeh

The Middle East is no longer experiencing isolated economic or political crises confined within national borders. Instead, the region has become part of wider regional and international arrangements shaped largely outside its own capitals. Key decisions related to security, energy, finance, and trade are increasingly influenced by external actors, while many Arab economies find themselves adjusting to outcomes rather than participating in their design. This reality has direct consequences for development paths and long-term economic stability.

What the region is facing today is not unique in global terms. International experience shows that regions lacking institutional coordination and economic integration are more exposed to external influence. According to World Bank assessments, regions with stronger economic frameworks and shared markets are better positioned to absorb shocks and protect policy autonomy. In contrast, fragmented regions tend to lose decision-making space during periods of global uncertainty.

The nature of external influence has also evolved. It is no longer limited to direct military involvement. Economic and financial tools have become more influential. Sanctions, control over financial flows, access to international markets, and conditional financing are now central instruments of pressure. International Monetary Fund analyses indicate that economies subject to financial restrictions or political risk experience higher growth volatility and sustained declines in long-term foreign investment.

This reality has translated into financial vulnerability across several Arab economies. Heavy reliance on external markets and the US dollar has increased exposure to global monetary tightening. IMF data show that between 2022 and 2024, tighter global financial conditions raised borrowing costs for emerging and developing economies by more than two percentage points on average. For many Arab states, this significantly narrowed fiscal space and limited policy flexibility.

Internal weaknesses have further amplified this exposure. The absence of effective Arab economic coordination and the decline of joint economic action have weakened collective resilience. Intra-Arab trade remains limited, accounting for only 10–12% of total Arab trade, according to ESCWA and the Arab Monetary Fund. By comparison, intra-regional trade exceeds 60% in the European Union and East Asia, supporting greater economic independence and policy coordination.

Ongoing regional conflicts deepen these vulnerabilities. Prolonged instability in Gaza, the West Bank, Syria, Lebanon, Sudan, and Iraq continues to undermine growth prospects. World Bank estimates suggest that conflict-affected countries lose between two and three percentage points of potential annual growth, while sovereign borrowing costs rise due to heightened political risk.

The economic cost of fragmentation is substantial. ESCWA estimates that Arab conflicts and political divisions have resulted in cumulative economic losses exceeding USD 900 billion over the past decade. These losses reflect foregone output, reduced investment, rising unemployment, and weakened human capital. Youth are particularly affected, as limited growth and instability push skilled workers toward migration, eroding the region’s demographic and productive potential.

In conclusion, the greatest challenge facing the Arab world is not external involvement itself, but the normalization of dependence on it. Breaking this pattern does not require confrontation, but internal realignment. Practical steps include selective and flexible economic coordination, joint projects in energy, food security, logistics, and digital infrastructure, and diversification of financial partners. Stability should serve as a platform for production and investment, not as an end in itself. In a rapidly evolving global system, losses are measured not only by what is taken away, but by what is delayed and left undone.